Microfinance Bureau in India from Equifax

It is quite common to analyze that some banks and finance organizations do not easily lend credit to low-income earning individuals. The primary reasons for this unwillingness are concerned with the failure of such borrowers to offer collateral or concerned documents. Whereas, the other reasons comprise lesser knowledge regarding the repayment capability of the individual. Therefore, as a solution to all such issues, microfinance comes into the limelight. It is a wonderful platform that offers financial aid to applicants who face issues while borrowing from financial institutions.

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Empowering Rural Communities with Accessible Credit and Financial Services

In India, microfinance emerged to empower the unmerited group to offer them equal access to necessary credit. Specifically, the population in rural areas isn’t able to gain easy access to established credit from commercial banks. Therefore, Microfinance institutions (MFI) offer small loans along with other credit-related services to support these people. It is important to note that, there is consistent contact as well as follow-up between the customer and MFI. The authority also works to offer several products like remittances, insurance, and pensions through an active merger with mainstream suppliers. Under this process, the repayment can be made in a weekly or monthly format.

MFI & Relation with Credit Bureaus

India is slowly growing its branches towards economic progress, and several Credit Bureaus have been planning to set up their foothold in the nation by providing credit scores to individual customers and credit ranks to businesses and enterprises. This sector, while serving the underprivileged, has dropped into a bumpy path in the past. There have been many cases related to clients defaulting, which has directly led to the closure of numerous similar institutions. With crores of money at stake, it is important to value the fact that microfinance institutions do need some sort of backing from the already established financial organizations. Hence, credit bureaus have been called in to play their vital role in lifting the MFI sector

Equifax India, Experian, High Mark Credit Information Services Pvt. Ltd and CIBIL, are the four prime credit bureaus that are operational across India. Each of these organizations is also termed a microfinance credit bureau since they also aid the microfinance segment

Microfinance Credit Bureau – Equifax

It is interesting to know that, Equifax India manages a discrete bureau that supports the Microfinance segment. This agency collects client data to allow the smooth handling of microloans as well as other microfinance offerings. Under the microfinance credit bureau managed by Equifax, the different microfinance products and associated tools are extracted with a primary motive to collect credit information on microfinance pledgers and deliver them in a highly reasonable and readable format to MFIs. The MFIs, therefore, use this information to evaluate the creditworthiness of probable borrowers

Equifax Microfinance Bureau provides admission to data from participating microfinance bodies amidst other related products. It is important to remember that, the members of microfinance establishments report to the concerned credit bureau for delivering relevant information periodically. This data includes the credit behavior as well as repayment management of the consumers. Presently, the MFI credit bureau has more than 1300 member organizations and is frequently adding new members along with consistent data

The microfinance bureau branch of Equifax accommodates the requests of MFI through the offering of products such as microfinance portfolio review, microfinance credit information report, and microfinance score to assist businesses to present in the microfinance segment to make improved lending decisions

What is a Microfinance Credit Information Report (CIR)?

A microfinance credit information report (CIR) is tagged as a readable and functional consumer credit report similar to a CIR but contains details related to the microfinance segments. This CIR is supported by radical search and match procedures. What is the purpose of microfinance CIR? It assists lenders in evaluating risk linked with a potential customer. The concerned report presents a crisp and in-depth view of the client, together with a comprehensive report on his/her credit behavior covering facets like active credit accounts, repayment cycle, etc.

The Equifax database for consumer credit linked to the microfinance segment includes almost all regions across India. The Equifax Microfinance CIR encloses the potential customer's identification and contact details, credit score, credit summary, credit utilization, and latest activity about credit. Further, it also covers a complete Account Details Section that mentions credit accounts from the past and present, along with data connected to the repayment track for each of the possessed accounts. Also, there is an Inquiries Section that offers exact details associated with the count of inquiries issued to the consumer.

Other 3 Credit Bureaus in India

Apart from Equifax, the other prominent Credit Bureaus in India also deal with microfinance operations. Let us analyze the different MFI products and services managed by these popular credit bureaus:

TransUnion CIBIL: It offers Market Insights, Company Credit Information Reports, Bureau Analyzer, Portfolio Reviews, and TransUnion Score to benefit and guide various MFI institutions

CRIF High Mark: This organization possesses a faithful MFI bureau that fulfills the specific needs of the concerned segment. Highmark MFI bureau provides several products along with services such as Portfolio Management, PERFORM score, geo-analytics consulting, alerts, etc.

Experian: It is considered a budding player in the microfinance sector. Experian offers different products that are supplied to microfinance bodies such as customer targeting, collections, customer management, business information services, and analytical solutions.

Impact of Microfinance in India

In 2010, a lot of things changed for the Indian Microfinance Industry, all because of a specific scandal that caused a major transformation that brought a positive outlook. It involved millions of defaulters holding loan values summed to a total of thousands of crores. The situation grew tense due to the rising number of mishappenings occurring as a result of tough collection practices. Therefore, the RBI and state governments intervened to frame proper regulations which signaled a better future.

The RBI propagated fresh regulations that stated Credit Bureaus to be established to assist MFIs. This step has proven efficient and successful in protecting the future of MFIs. The task of the credit agencies is fixed, that is, to provide sufficient information to the MFIs and consumers; hence, dropping the curtain on unplanned lending and catering to MFIs with value-added products.

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